Kathmandu mounts new drive
Outdoor adventure clothing and equipment retailer Kathmandu is aiming to more than double its online sales to 10 per cent in coming years and believes it can turn around its troubled British business to deliver another solid full-year result this year.
The company, which listed on the sharemarket four years ago led by its then chairman, the late James Strong, reported on Tuesday a 26.6 per cent lift in its annual profit to $NZ44.2 million ($39.2 million) for the 12 months to July 31.
The market immediately rewarded the company for its strong result, which was especially pleasing against the backdrop of a generally poor retail sector, sending Kathmandu shares soaring 12 per cent before closing up 11.37 per cent at $2.84.
In the midst of tough trading conditions for most discretionary retailers, Kathmandu managed to dodge the worst of the downturn that had decimated other fashion chains, with revenues for the year up a healthy 10.6 per cent to $NZ384 million.
For the full year its same-store sales growth, drawn from its 136 stores across Australia, New Zealand and Britain, rose 5.6 per cent.
During the year, Kathmandu opened 17 new stores, eight of these in the second half.
Its Australian operation recorded 6.7 per cent same-store sales growth. There was 4.4 per cent sales growth in New Zealand and a 6.5 per cent drop in sales from its five British stores.
Online sales growth was the standout performer, jumping 55 per cent in 2012-13 to now contribute more than 4 per cent of group sales.
Kathmandu chief executive Peter Halkett, who only recently returned to work after a two-month illness, said the retailer's digital platform represented huge potential and should eventually generate 10 per cent of group sales. "There is no reason why we shouldn't be targeting 10 per cent over the next three years."
But the growth of the retailer's online platform had been held back by the lack of a true omni-channel offering whereby customers could easily slide between the physical store and an online site to order or pick up their goods.
"It's not an omni channel yet, we haven't got some of the enhancements that we think are important to be a modern online retailer, so in many ways we have still got a lot of things to do," Mr Halkett said. "But that also reflects there is a lot of growth to come for it."
Some of these enhancements would include leveraging the brand power of online stores such as Amazon to sell its Kathmandu range of apparel and equipment.
On a per capita measurement, New Zealanders continued to spend heavily at the company's stores through both economic upturns and softer conditions, Mr Halkett said.
Turning to the outlook for 2013-14, he said that provided there was no deterioration in economic conditions the company expected another solid performance this year characterised by a minimising of costs and a focus on its growth strategies.
He declined to give guidance on actual profit expectations but added: "What we have seen last year, and what we have seen for the last four years, there is no reason why we shouldn't deliver a pretty solid outcome."
Kathmandu will open seven new stores in the first half of 2013-14, including six in Australia.
Kathmandu declared a fully franked final dividend of NZ9¢ per share, up from NZ7¢ per share declared last year.
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free